The Tribunal stated in Reddy/Siemens  SCA 164 that “the material right, as provided in Magna Alloys, is that a restriction is enforceable, unless it proves inappropriate, which necessarily places a constraint on the person attempting to escape it.” In noting the adequacy, the Tribunal considers the public interest that requires the parties to respect their contractual obligations, contrary to the interests of society, which allows individuals to act freely and to be employed in the profession of their choice. In the analysis of a clause to determine whether the doctrine of trade restriction is applicable, three sub-questions must be answered: companies do not have complete freedom when drafting trade clauses and enshrining them in their trade agreements. If you are considering a trade clause in one of your commercial contracts, make sure it meets the above requirements. If you have any questions about trade restrictions or other business or contractual issues, contact Neil Williamson. The final question to consider is what are the restrictions on trade doctrine. In Chua Chian Ya v Music – Movements (S) Pte Ltd (4), the Singapore Court of Appeal distinguishes between restrictions on an artist`s ability to earn a living (i.e. by writing or performing music) and restrictions on an artist selling their own interest in their musical compositions. The Tribunal found that the doctrine of trade restraint applied to the previous deduction, but not to the latter. To the extent that the clause in question concerned the sale of the artist`s intellectual property rights, the Tribunal found that the clause was not a commercial clause. While, for example, a limitation and side effect on the meaning of the Mitchel and Addyston Pipe business acumen is necessary and complementary, the fact that their anti-competitive effects and harm to the public interest outweigh their advantage may nevertheless constitute an undue restriction on trade. For example, in Polygram, Ginsburg J.A. stated that, in order to ascertain whether a contract constitutes a commercial restriction, a court will consider three factors: in general, if a blocking clause is found to be inappropriate, then it is non-extended. However, in certain circumstances, the Tribunal may maintain this either through the finding of ambiguities or by severance pay.
The reversion consists of the application of what is called the “blue-pencil test”; If certain words that go too far in the clause can be struck and the clause still makes grammatically meaningless without altering the nature of the undertakings, the courts may be prepared to break the illegal aspects of the clause and enforce the rest. What is written in a signed employment contract does not always directly mean what is legally enforceable. For a clause in an employment contract to be applicable, it must first be legal. I find it hard to remember the last time I saw a labour agreement containing a “Restraint of Trade” clause that I considered perfectly legal and enforceable in terms of how it was written. It is important not to confuse “trade restriction” clauses with non-solicitation clauses. You can find more information on my non-demand page. Most employment contracts contain a limitation of the trade clause. Many people consider it to be simply a standard clause, but it can have a serious impact on future employment. Contract law: A person or company that feels aggrieved about the business can take the matter to court and say that the contract or business contract is illegal. If the terms of a contract restrict trade, the contract cannot be brought before a court to be heard (such as legal action) because it is illegal.